Perpetual Bets Big On “Transformational” US Expansion

By Glenn Dyer | More Articles by Glenn Dyer

Perpetual has confirmed that it is moving to buy a US fund manager in a $465 million deal, and is raising new capital from local shareholders to do so.

Perpetual told the ASX yesterday that it was buying a dominant stake in United States asset manager Barrow Hanley it says will triple funds under management and accelerate its global growth.

The Sydney-based fund is raising up to $265 million in new equity to help fund the deal, including issues to big and retail shareholders. On top of that it has done a new $284 million debt deal with bankers to help finance the rest of the transaction.

Perpetual is buying a 75% stake in the Dallas-based manager, which has approximately $US44.1 billion in funds under management ($A64 billion). That will see Perpetual’s funds under management rise from$28.4 billion to $92.3 billion.

Perpetual put its shares put in a trading halt yesterday to allow the bulk of the money to be raised from major institutions.

Perpetual will issue up to $225 million in new shares through an institutional placement at a price of $30.30, a 9.8% discount to its previous trading price of $33.61 last Friday.

It is issuing approximately 15.7%of its existing shares on issue under the placement. Perpetual also plans to raise up to $40 million through a share placement plan for retail shareholders, under which investors will be able to apply for up to $30,000 in new stock.

The company also provided profit guidance, saying it expected a statutory profit of $82 million, and it would pay a dividend of 80 to 100% of net profit after tax for this year.

Beyond that, the fund manager said it would change its dividend policy to reflect the impact of the acquisition, which it called a “transformational milestone,” on group profits.

Perpetual CEO Rob Adams said: “This is a compelling acquisition. It provides Perpetual with world-class investment teams, diversifies our client base by sector and geography, and presents us with significant growth opportunities in the Australian market and a formidable platform to scale our business internationally.”

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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